Elements of the EU's Code of Conduct on Arms Exports, adopted in 1998, are in dire need of revision to match present day realities, writes Saferworld's Roy Isbister for ISN Security Watch.

The 1980s were dark days for European arms transfer controls. With no regional coordination, EU members practiced individual, and largely secretive, ways of managing their arms exports. When it came to light that some member-states had been complicit in arming both sides during the Iran-Iraq war there was a public outcry: the EU's house needed putting in order.

In June 1998, the EU adopted the world's first regional conventional arms transfer control agreement, The EU Code of Conduct on Arms Exports. This politically binding agreement aimed to set 'high common standards' for EU member-states exporting arms and set out eight criteria that must be considered before an arms transfer is approved.

At the time 'the Code' was ground-breaking, but 10 years on it is beginning to show its age.

The need for a 'Common Position'

Currently, the Code is a political agreement: Member states are under no legal obligation to follow the standards it sets – although some have introduced it, or parts of it, into their national legislation. However, a redraft of the Code completed in 2005 did see the (largely identical) text rewritten as a 'Common Position' which, if adopted, would oblige member- states to ensure their national legislation was consistent with its requirements.

Changing the status of the Code in this way would raise the possibility of legal challenges to export licensing decisions. It would also help promote high standards for transfer controls beyond EU borders as candidates for accession would be obliged to ensure their national law complied with the Common Position under the EU's acqui communautaire – the body of EU law to which aspirant states must adhere.

However, continued opposition from France has blocked the adoption of the Common Position. France has used the issue as a bargaining tool in its efforts to lift the EU arms embargo on China – a strategy which, since late 2006, has left them increasingly isolated in their opposition. But until member states can reach a consensus, the Code will remain only a set of political guidelines.

Addressing globalization

The ongoing globalization of the defense industry involves the complex movement of components, kit parts and sub-assemblies around the world. Companies also increasingly make use of overseas subsidiaries or license the production of their designs to manufacturers that are located outside the EU.

This shift to a more complicated pattern of production and export makes regulation all the more challenging. Unfortunately, the aging Code was designed to deal with more straightforward license applications and is struggling to cope with the realities of 21st century arms manufacture and business practices.

As a result, in the last decade EU military equipment has repeatedly found its way via third parties to states the EU would probably not otherwise supply.

For example, German engines copied by a firm in China are now included in armored vehicles supplied to the Democratic Republic of Congo, North Korea, Sudan and the military regime in Myanmar (Burma). Although the German company exported the engines with the agreement that they would only be used for civilian purposes, the Chinese firm reverse engineered the technology and used it to produce their own versions.

In South Africa, UK-headquartered BAE Systems holds a 75 percent share in a company which manufactures armored vehicles and has exported them to Guinea, Indonesia, the Ivory Coast, Nepal, Rwanda, Serbia and Uganda. Had a company attempted to source such transfers directly from the UK, it is unlikely that all of them would have been approved.

Manufacturers in Ireland, the Netherlands and the UK have all supplied advanced components to the US which were then incorporated into weapons systems and platforms such as F-16 fighter jets and Apache attack helicopters before being exported to Israel.

Although these complex webs of ownership and association, production and incorporation of components present difficult challenges for the EU's arms transfer control regime, it is critical that the EU shifts gears to reflect this strategic reality. If the Code is to fulfill its aim of preventing 'the export of equipment which might be used for internal repression or international aggression then sophisticated and robust mechanisms must be built into the Code to help it meet these contemporary challenges.

A birthday wish

At its inception, the Code represented a fundamental shift in the way the EU managed its arms exports and was frequently the benchmark against which other regional agreements were measured.

However, times change and the Code needs to change with them. A politically binding agreement is no longer enough. Neither is one that fails to take into account the realities of globalization.

The EU's transfer control system exists to prevent the irresponsible and unregulated export of arms which fuel conflict, contribute to violations of human rights and undermine sustainable development. The occasion of the Code's 10th birthday provides a perfect opportunity for EU members to look afresh at how the Union can best ensure the Code fulfills, and continues to fulfill, this purpose. They must grasp this opportunity with both hands.